How Much Should a New Med Spa Set Aside for Taxes?

2026-08-21

New med spa owners should set aside 25-35% of net income for taxes. Learn the exact formula, quarterly payments, and practical steps to avoid surprises.

Starting a med spa is exciting, but the tax bill can be a rude awakening if you haven’t planned for it. As a new owner, you’re likely an LLC or S-corp, and the IRS expects you to pay taxes throughout the year, not just on April 15. So, how much should you set aside? The short answer: plan to set aside 25% to 35% of your net profit (revenue minus expenses) for federal and state taxes. This range covers income tax, self-employment tax (if applicable), and state taxes. Below, we break down the math, the payment schedule, and the exact steps to get this right from day one.

Why 25% to 35%? The Tax Breakdown

Your tax rate depends on your business structure and total income. Here’s what you’re paying:

Federal income tax: This is progressive. For a single filer in 2026, rates range from 10% to 37%. Most new med spa owners fall into the 22% to 24% bracket after deductions.
Self-employment tax (if you’re a sole proprietor or single-member LLC): This is 15.3% (12.4% for Social Security, 2.9% for Medicare). You pay this on net earnings, but you can deduct half of it on your personal return.
State income tax: This varies by state. States like Texas and Florida have no state income tax, while California can add up to 13.3%.

So, if you’re in a 22% federal bracket, pay 15.3% self-employment tax, and live in a state with a 5% rate, your total is 42.3%. But you get deductions (like the qualified business income deduction, which can reduce your effective rate), so a safe estimate is 25% to 35%. For example, if your med spa nets $100,000 after expenses, set aside $25,000 to $35,000.

The 25% Rule: A Simple Starting Point

If you don’t want to calculate your exact bracket, use the 25% rule as a baseline. This is a common rule of thumb for small business owners. Here’s how it works:

Calculate your net profit: This is your total revenue minus all business expenses (supplies, rent, marketing, payroll, etc.).
Multiply by 25%: This gives you your minimum tax reserve. For example, if your net profit is $80,000, set aside $20,000.
Adjust upward if needed: If you’re in a high-tax state or have a higher income, bump it to 30% or 35%.

This percentage covers federal income tax and self-employment tax, but not state tax. If your state has an income tax, add 5% to 10% to your reserve.

Quarterly Estimated Payments: When and How Much

The IRS requires you to pay taxes quarterly if you expect to owe more than $1,000. For 2026, the due dates are:

Q1: April 15, 2026
Q2: June 15, 2026
Q3: September 15, 2026
Q4: January 15, 2027

To calculate your quarterly payment, use the annualized income installment method or the simpler method: take your estimated annual tax liability and divide by 4. For example, if you estimate you’ll owe $30,000 for the year, pay $7,500 each quarter.

Pro tip: Use Form 1040-ES to calculate your estimated payments. You can pay online via the IRS Direct Pay system or by mail.

How to Set Aside the Money: Practical Steps

Here’s what you can do this week to get your tax reserve in place:

Open a separate business savings account. This is your tax account. Do not mix it with your operating funds.
Transfer a percentage of every deposit. As soon as a client pays, transfer 25% to 35% of your net profit (not revenue) into this account. If you’re not sure about your net profit, use 25% of revenue as a rough estimate, but be aware that your net profit is lower, so this may be conservative.
Use accounting software. QuickBooks or Xero can track your income and expenses, and you can set up a rule to automatically transfer a percentage to your tax savings.
Review your numbers monthly. At the end of each month, look at your profit and loss statement. Adjust your transfer rate if your profit changes.
Pay your quarterly estimates on time. Mark the due dates on your calendar. Late payments incur penalties and interest.

What If You Don’t Set Aside Enough?

If you underpay, you’ll face penalties. The IRS charges a penalty for underpayment of estimated tax, which is based on the federal short-term interest rate plus 3%. For 2026, that’s around 8% annually. Plus, you’ll owe interest on the unpaid amount. To avoid this, aim to pay at least 100% of your previous year’s tax liability (or 110% if your adjusted gross income is over $150,000).

If you’re in your first year, you don’t have a prior year’s liability, so you’ll need to estimate carefully. Use your business plan projections and adjust as you go.

Tax Deductions for Med Spas: Lower Your Taxable Income

Every dollar you deduct reduces your tax bill. Common deductions for a med spa include:

Equipment and supplies: Lasers, injectables, skincare products, and medical supplies.
Rent and utilities: Your office space and utilities.
Payroll: Wages for your staff, including estheticians and nurses.
Marketing: Advertising, website, and social media costs.
Insurance: Malpractice, liability, and property insurance.
Professional fees: Legal, accounting, and consulting services.
Continuing education: Training and certifications for you and your staff.

Keep receipts and track all expenses. A good accountant can help you maximize deductions, which lowers your net profit and thus your tax reserve.

FAQ: Common Tax Questions for New Med Spa Owners

Q: Should I set aside taxes on revenue or profit? A: On profit. You only pay taxes on your net income after expenses. If you set aside on revenue, you’ll over-save, which is fine, but it ties up cash. Aim to calculate your profit accurately.

Q: Can I pay taxes once a year instead of quarterly? A: Only if you expect to owe less than $1,000. Otherwise, you must pay quarterly. If you don’t, you’ll face penalties.

Q: What if I have a slow month? Can I skip a quarterly payment? A: No. You can adjust your payment amount, but you must file and pay something. If you skip, you’ll incur penalties. Use the annualized method if your income is uneven.

Q: Should I hire a CPA or use tax software? A: For a new med spa, a CPA is worth the investment. They can help you with entity structure, deductions, and quarterly planning. Expect to pay $300-$500 for a consultation and $1,000-$2,000 for annual tax preparation.

The Bottom Line

Set aside 25% to 35% of your net profit for taxes, and pay quarterly. Open a separate savings account, transfer a percentage of every deposit, and track your numbers monthly. If you’re unsure, consult a CPA. The cost of a professional is far less than the penalties and stress of underpaying. Start today: calculate your estimated net profit for the year, multiply by 0.25, and divide by 4 to get your first quarterly payment. Then, set up that automatic transfer. Your future self will thank you.